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China gaming ban: no new licenses in May points to ‘new normal’ in regulatory hostility

  • Silence has followed the agency’s approval for 45 new video-game titles on April 11, leaving the industry in the dark
  • China has the world’s biggest mobile-gaming market with an estimated US$49 billion revenue, one investor estimates

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People playing online games at the booth of Huya, a Chinese live-streaming platform for video games and e-sports, during the 19th China Digital Entertainment Expo & Conference in Shanghai in July 2021. Photo: Getty Images
China’s video game regulator has refrained from issuing any new licenses in May after it ended an eight-month freeze in April, signalling Beijing’s regulatory hostility will persist for now, industry insiders say.
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The National Press and Publication Administration (NPPA), the agency in charge of licensing video games in China, approved a list of 45 new titles from game developers on April 11, raising hopes that the regulator would return to the old routine of approving dozens of titles on a monthly basis.

Since then, however, the agency stopped issuing new licenses to developers without any explanation, a departure from the previous episode of industry calamity. The agency approved hundreds of titles after December 2018, when it ended a nine-month ban after completing a regulatory regime reshuffle.

The stop-start pattern is a painful test for China’s gaming industry, which is already grappling with strict content censorship and stagnating growth in the number of players. The absence of new approvals last month is a clear sign that the good old days are over, analysts said.

“We do not expect the rate of approvals to differ from that of 2020 and 2021, nor do we expect a return to pre-2018 approval levels,” said Daniel Ahmad, a senior analyst at video game research firm Niko Partners.

The situation may become untenable for small and medium sized companies reliant on new licences to generate income. With no new games released, nearly 14,000 game-related firms in China were forced to shut down in 2021.
Many small game companies have been looking for investment or to be acquired to weather the storm, Ahmad said, with investors unsure of committing new capital. China’s mobile gaming market generates US$49 billion in revenue, making it the world’s biggest, according to US money manager Dodge & Cox.
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